The Canadian dollar tumbled to a three-week low against its US counterpart on Thursday, pressured by domestic inflation data that reminded the market of the risk of further interest rate cuts from the Bank of Canada. Canada's annual inflation slowed in November to 1.2 percent from a rate of 1.5 percent in October, Statistics Canada said. Forecasts had put the rate at 1.4 percent.
"That Canadian inflation data miss clearly gave another shot in the arm to dollar-Canada and it forced us through C$1.35," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets. The Canadian dollar ended the day at C$1.3497 to the greenback, or 74.09 US cents, weaker than Thursday's close of C$1.3407, or 74.59 US cents. "To the extent that a (Bank of Canada interest) rate cut was discussed in October, I don't think today's numbers rule that out," said Desjardins Senior Economist Jimmy Jean.
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